Mongolian coal mining stops, drops and …
Mongolian Mining Corp (HKG:0975), the country's biggest coking coal exporter, hit a record low today as investors looked at the likelihood of more restrictive investment policies which would be implemented after Mongolia's parliamentary elections this week.
The company's share price closed at $4.66, a far stretch from last year's $9.72.
This downward trend has been seen across Mongolia's mining sector as policy makers are leery to let oversees investors have a majority hold in any of Mongolia's stakes.
As Bloomberg reported, "Lawmakers, seeking to control ownership of assets, approved a law in May requiring parliament to approve deals in which overseas investors hold more than 49 percent of the equity and for transactions exceeding $75 million in strategic sectors, including mining. "
The industry has come under so much pressure that operations at the Ovoot Tolgoi mine have stopped completely. SouthGobi Resources, the coal mine's owner, suggested in a press release that weak market conditions and regulatory issues forced the closure.
Canadian Business stated that production had previously been shut down under order from the Mongolian government as it reviewed a "plan by state-owned Aluminum Corp. of China to acquire a majority stake in the miner from a Canadian company."
Out of fear of an investor backlash, Mongolian legislators watered down many of the investing provisions in May. However, as Reuters reported, "mining, media and banking projects will still be subject to stringent restrictions."
Mining is the foundation of the Mongolia's economy. The nation with fewer than 3 million people is reported to have mineral assets worth upwards of $1.3 trillion.